tag:blogger.com,1999:blog-5713178645208582139.post3100889079630968162..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: Is The ECB Actually Targeting the Monetary Base?David Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-5713178645208582139.post-66596717394093865742011-03-17T17:08:00.492-05:002011-03-17T17:08:00.492-05:00With the current Japanese tragedy heightening risk...With the current Japanese tragedy heightening risk aversion in the markets, there would be little chance that ECB will raise rates in the short run. Spain the least exposed to the debt problems in the PIGS category. At govt yield of 4.2%, they seem to be able to make it out of the crisis in whole.intrinsic valuehttp://theintrinsicvalue.comnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-22366908103431227462011-03-14T08:42:12.047-05:002011-03-14T08:42:12.047-05:00Mark: an arithmetic straight line strikes me as ev...Mark: an arithmetic straight line strikes me as even weirder than a logarithmic straight line, and even less likely to occur "naturally".<br /><br />And when you add in Anonymous' observation, it looks weirder still.<br /><br />We see the hand of God here! (OK, the hand of man or woman).Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-58353671152881667232011-03-14T04:42:29.329-05:002011-03-14T04:42:29.329-05:00How one would account for countries joining the eu...How one would account for countries joining the eurozone after 2001, like:<br /><br />Slovenia (2007)<br />Cyprus (2008)<br />Malta (2008)<br />Slovakia (2009)<br />Estonia (2011)<br /><br />So the extra addition of these countries should automatically increase the monetary base, so if you plot a graph of monetary base per country, it wouldn't look so straight.<br /><br />Or is that graph Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-15082551057749324582011-03-13T23:47:44.596-05:002011-03-13T23:47:44.596-05:00Mark:
All I said is show me a macro time series t...Mark:<br /><br />All I said is show me a macro time series that is an almost perfectly straight line. I was vague on time, but obviously I meant for as long as the ECB monetary base. So show me a macro time series naturally occurring that is straight for about a decade. You can't--they don't exist. And this has <i>nothing</i> to do with spurious correlations. This is simply a David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-47522242431038545242011-03-13T23:14:08.648-05:002011-03-13T23:14:08.648-05:00David,
You wrote:
"There are no naturally occ...David,<br />You wrote:<br />"There are no naturally occurring straight lines in macro time series. Name one."<br /><br />Don't be silly. One can always find spurious straight line correlations provided one is willing to limit the timeframe. I could absolutely bury you in examples if I didn't have better things to do with my time.<br /><br />My point is that the ECB is almost Mark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-84147703455236424312011-03-13T22:55:32.795-05:002011-03-13T22:55:32.795-05:00Mark:
There are no naturally occurring straight l...Mark:<br /><br />There are no naturally occurring straight lines in macro time series. Name one. Almost every (non-interest rate) macro time series has an exponential trend in level form. This is true for monetary aggregates as well. The ECB monetary base has no exponential trend. It is straight line. It is unique in this regard and not natural. It would require more than chance to create such David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-21429089993659475032011-03-13T22:14:46.497-05:002011-03-13T22:14:46.497-05:00David,
Don't be ridiculous (again with all due...David,<br />Don't be ridiculous (again with all due respect). Some patterns are always spurious. (Nothing comes to mind at the moment but if you stop and think about this it is of course true.) <br /><br />If one is targeting a rate of change and not an arithmetic rate of change one would see a line in log terms. Anyone who is targeting exponential growth should be looking for flat lines in Mark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-1472202934180056312011-03-13T21:54:22.022-05:002011-03-13T21:54:22.022-05:00Mark:
Nick is right. Anytime you see a straight l...Mark:<br /><br />Nick is right. Anytime you see a straight line--fixed exchange rate, targeted interest rate--it is because of a conscious policy choice. Logs are only used in policy making to make it easier to think about issues, not to actually implement decisions.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-14814805294959611672011-03-13T20:33:56.629-05:002011-03-13T20:33:56.629-05:00Nick,
I repectfully disagree. Straight lines depen...Nick,<br />I repectfully disagree. Straight lines depend on the metric. Why would anyone (especially the ECB) be mapping MB on an arithmetic plain?Mark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-52781871868689394912011-03-13T20:16:52.976-05:002011-03-13T20:16:52.976-05:00If you see a straight line on a map, you know it&#...If you see a straight line on a map, you know it's not natural. Someone made it. If you see a straight line in economics, you know someone made it straight. That line for the money base is too straight to be natural. The ECB must have made it straight. But why?Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-37914603131549863642011-03-13T18:40:19.393-05:002011-03-13T18:40:19.393-05:00Sure the MB pattern is linear in an arithmentic se...Sure the MB pattern is linear in an arithmentic sense but not logarithmically. It's probably just a spurious pattern that is the aritifact of something else. <br /><br />The real test is probably which is more closely correlated to an exponential growth pattern, M3 or NGDP.Mark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.com